Trex Delivers EPS Win, Revenue Dips

Trex Company Inc. (NYSE:TREX), a leading producer of composite decking and railing, released its earnings report for the fourth quarter of 2024 on Feb. 24, 2025. The company disclosed earnings per share (EPS) of $0.09, outperforming the analyst forecast of $0.0428. Revenue hit $168 million, slightly higher than the anticipated $160 million but down from $196 million in the same quarter the previous year. Overall, while the quarter revealed significant inventory challenges that weighed on sales, Trex exceeded profitability expectations.

Source: Analyst estimates for the quarter provided by FactSet.

A Snapshot of Trex's Business

Trex Company Inc. stands as a top producer of composite decking and railing, made from eco-friendly and sustainable materials. With a market-leading branding, its products are widely distributed across more than 6,700 retail outlets globally, including chains like Home Depot and Lowe's.

The company has recently focused on strengthening its brand through market expansion and product innovation, placing significant emphasis on sustainability. New heat-resistant and eco-friendly technologies are a part of this focus, ensuring its offerings are aligned with growing consumer preferences for environmentally conscious products.

Q4 2024 In-Depth Review

For Q4 2024, Trex experienced a year-over-year decline with net sales falling by 14.3% to $168 million. This decrease was primarily due to a strategy-driven $45 million reduction in channel inventory. However, the company's gross margin also shrunk from 36.1% the previous year to 32.7%, reflecting intensified pressures to maintain cost efficiencies with lower sales volumes.

Net income was reduced to $10 million compared to $22 million the previous year, alongside shrinking EBITDA from $41 million to $29 million. The EBITDA margin, a crucial profitability measure, contracted to 29.1%, indicating tighter financial constraints caused by reduced revenue.

Despite these setbacks, Trex secured a solid performance throughout 2024, reporting $1.2 billion in annual net sales, reflecting a 5.2% year-over-year growth. Concurrently, the full-year net income grew by 10.2% to $226 million, illustrating the company’s capacity to navigate through short-term operational hiccups.

Strategically, Trex's commitment to innovation saw the introduction of products that contributed approximately 18% to annual revenues.

Looking Ahead

Trex remains focused on future growth, estimating a 5% to 7% revenue increase for 2025 and an expansion in its adjusted EBITDA margin to over 31%. The company's inventory strategy revisions aim to stabilize earnings across quarters, an adjustment made to reduce volatility from channel stocking patterns.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 917% — a market-crushing outperformance compared to 175% for the S&P 500.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

Learn more »

*Stock Advisor returns as of February 24, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Trex. The Motley Fool has a disclosure policy.